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Sent to you by pakurilecz via Google Reader: Finding Question of Duty
to Preserve Backup Tapes Hinges on Applicability of Exception to the
Rule, Court Orders Hearing to Address the Issue via Electronic
Discovery Law by [log in to unmask] (K&L Gates) on 4/17/09
Forest Labs., Inc. v. Caraco Pharm. Labs., Ltd., 2009 WL 998402 (E.D.
Mich. Apr. 14, 2009)

In this case, defendants filed a motion seeking a hearing to address
plaintiffs’ suspected spoliation of evidence, for an order forbidding
plaintiffs from asserting that their drug, escitalopram, did produce
unexpected results, and for plaintiffs to pay attorney fees.
Defendants’ motion alleged plaintiffs had destroyed or rendered
unsearchable “key electronic records” tending to show that the drug did
not produce unexpected results. Plaintiffs denied the allegation
arguing they had preserved all emails on their active file server and
had continued their standard operating procedures in good faith.
Finding that inaccessible information stored on plaintiffs’ disaster
recovery back up tapes had been destroyed after the duty to preserve
arose, the court held that a hearing was necessary to determine whether
that information was subject to an exception that would have required
the tapes to be preserved.

In its analysis of defendants’ allegations of spoliation, the court
first articulated that:
a party seeking an adverse inference instruction based on the
destruction of evidence must establish (1) that the party having
control over the evidence had an obligation to preserve it at the time
it was destroyed; (2) that the records were destroyed "with a culpable
state of mind"; and (3) that the destroyed evidence was "relevant" to
the party's claim or defense such that a reasonable trier of fact could
find that it would support that claim or defense.

Turning first to the duty to preserve, the court established that the
relevant duty to preserve arose in August of 2003. Plaintiffs conceded
that they did not halt the recycling of backup tapes until May of 2005.
Thus, the more substantive issue became whether the duty to preserve
extended to information contained on those backup tapes. Accordingly,
the court identified the necessary considerations in addressing that
As articulated by the Zubulake court,
[t]he scope of a party's preservation obligation can be described as
follows: Once a party reasonably anticipates litigation, it must
suspend its routine document retention/destruction policy and put in
place a "litigation hold" to ensure the preservation of relevant
documents. As a general rule, that litigation hold does not apply to
inaccessible backup tapes (e.g., those typically maintained solely for
the purpose of disaster recovery), which may continue to be recycled on
the schedule set forth in the company's policy. On the other hand, if
backup tapes are accessible (i.e., actively used for information
retrieval), then such tapes would likely be subject to the litigation

Plaintiffs argued the backup tapes were maintained solely for the
purpose of disaster recovery and were not subject to the duty to
preserve. Testimonial evidence was offered in support of this position.
Defendants offered nothing to rebut plaintiffs’ position and the court
found the backup tapes were inaccessible. However, the inquiry did not
end there.

As established in Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216
(S.D.N.Y. 2003), there is one exception to the rule that there is no
duty to preserve inaccessible backup tapes:
If a company can identify where particular employee documents are
stored on backup tapes, then the tapes storing the documents of "key
players" to the existing or threatened litigation should be preserved
if the information contained on those tapes is not otherwise available.
This exception applies to all backup tapes.

Declining to issue a ruling on the applicability of the exception in
the present case, the court indicated its intent to permit the parties
to address the issue at an upcoming hearing.

As to the issue of culpability, the court recognized the three
“possible states of mind that satisfy the [culpability] requirements”
to receive an adverse inference: bad faith, gross negligence, and
ordinary negligence. Acknowledging the relationship of culpability to
the burden of establishing relevance, the court noted, “‘the more
culpable state of mind [bad faith or intentional misconduct] lessen[s]
the burden of showing relevance.” However, the court indicated its
unwillingness to address the issue of culpability until defendants
demonstrated at hearing that plaintiffs’ duty to preserve extended to
the backup tapes in question.

Having declined additional consideration of the issues until the
establishment of a duty to preserve, the court nonetheless briefly
addressed defendants’ burden of showing the relevance of the spoliated
information in order to prevail on its motion. Indicating that
defendants must show “some evidence suggesting that a document or
documents relevant to substantiating [their] claim would have been
included among the destroyed files,” the court also cautioned against
“‘too high a standard of proof regarding the likely contents of the
destroyed [or unavailable] evidence,’ because doing so ‘would subvert
the… purposes of the adverse inference, and would allow parties who
have destroyed evidence to profit from that destruction.’” (Citations

Accordingly, an order was entered scheduling a hearing to address the
issue of “whether the Zubulake exception applies and if so, whether
Plaintiffs acted with a culpable stated of mind and whether the
spoliated evidence is relevant.”

A copy of the full opinion is available here.

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